Loophole slammed shut in bid to rein in public sector’s wages

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Julian Harris

GOVERNMENT workers face a clampdown on a loophole that has been used to get around the public sector pay freeze, chancellor George Osborne confirmed yesterday.

Osborne has instructed state departments to crack down on progression pay – the practice of hiking salaries on the basis of so-called automatic time-served progression allowances in public sector employees’ contracts.

Despite an attempt to cap public sector pay, official figures published yesterday showed that it rose two per cent in the year to January.

The Budget re-emphasised that hikes should be capped to an average of one per cent per annum. Osborne also extended the cap an extra year, to 2015-16.

“We will also seek substantial savings from what is called progression pay. These are the annual increases in the pay of some parts of the public sector.

“I think they are difficult to justify when others in the public sector, and millions more in the private sector, have seen pay frozen or even cut,” the chancellor said.

Departments are expected to remove progression pay as part of this summer’s spending review.